Sharp Drop (45%) in New Home Loans Singapore

As reported in the Straits Times, the statements from DBS and OCBC chiefs paint a grim picture on home loans origination, in wake of strict lending rules.  It does look like TDSR is very effective!

Main points

1. DBS Chief said new mortgage applications in first three months of the year fell about 45% from the same period a year ago.

2. OCBC Chief said, compared to 2 years ago, new loan origination is down by about 40%.

3. MAS data reflect a similar trend.  Volume of new housing loans contracted 35% in the 3rd quarter last year, compared to the same period the year before.

4. Estate Agent Paul Lim, "Since the TDSR framework began, I've had four to six cases of clients wanting to buy, but when they go to the bank they cannot get the loan amount they were hoping for, so they cancel the transaction."

5. Bank Chiefs clarified, even though new loan applications dropped, the overall loan books were still growing, albeit at a slower pace.

Want a new home? 

In a previous blog post, I said that TDSR was here to stay.  Just in case people are wondering when Government will lift TDSR, my view is that it is very likely to be a permanent feature in our banking system. I had observed that even under TDSR requirements, credit is still very cheap and plentiful in Singapore compared to the UK.  We can get more than 10X combined income in housing loans, while the British only get 3.5X. What gives?

Anyway, I think Singapore Property prices are coming down.  Just how much will they come down by, that's the million dollar question.

Happy Investing!

China's Richest Man 王健林 Investing in London in Big Way

Who is China's richest man?  Any clue?  A quick search reveals that this person is considered China's richest man. His name is 王健林 or Wang Jianlin.

Wang Jianlin 王健林

Brief Background
He is recognized as a self-made billionaire. Born in 1954, he served in the People's Liberation Army from 1970 to 1986, before graduating with a degree from Liaoning University.  He rose up the ranks of Chinese state-controlled companies, before becoming CEO of the Dalian Wanda 大连万达 group in 1993.    He also has many political connections and is a member of the Chinese Communist Party.

His company owns Wang Jianlin, owns 75 department stores, 85 shopping plazas and 51 five star hotels. He also bought the US movie chain A.M.C in 2012, for US$2.6bn.  He then announced a US$500mil plan to refurbish all the theatres.

Now let's listen to Wang Jianlin, 王健林.

Wang Jianlin at Harvard - 大胆一点!


Short clip with Wang speaking in mandarin.  Worth a listen to.  He talks about taking risks.  There is no such thing as a sure-win.  You must take risks.  If you fail, try again.  But don't go in too big first, go into something smaller.  He gives the students one idea, he says the most important idea - be bolder! 大胆一点!

Listen at 1:25 mark where Wang talks about Entrepreneurial Spirit.
Two things are most important.
First - Creativity & Dare to do Big Things.
Second - Perseverance

Wang Jianlin at Tsinghua University - 清华大学演讲


Wang Jianlin talks about his company.  He speaks of China's economic growth, on average 9.5% in the past 20 years. His company rode on this wave.  Without China's growth strategy, it would have been impossible to grow so fast.

But why did Wanda grow so fast? Wanda's relentless creativity - 不但创新!

He has a saying - "什么北大清华大,不如胆子大!"  To accomplish anything, other than your intellect, environment, you need to dare to try and take risks.  He differentiates between taking foolish and unplanned risks, versus taking calculated and planned risks.

Dalian Wanda did 6 things right.  Listen to his speech to find out more.  His company's expansion in Chinese Real Estate has been phenomenal.  He now has global ambitions - 走遍天下都有 万达 .  This bold statement is consistent with Wanda's international expansion.

The company started off as a residential developer and was very successful.  However, in the year 2000, the company has a big strategic meeting and re-focussed itself on commercial/retail/hotel space.

What Has Wang Jianlin Got To Do With London Property? 
Dalian Wanda has gone into London in a big way, and their initial investments is just starting.  They bought the entire One Nine Elms Project from Green Property.

One Nine Elms is a mixed-use development which will comprise 1.13 million ft² (approx. 105,000 m²) of prime residential, office and retail space within two towers of 45 and 60 stories connected by a high level link bridge. Reaching 205 metres, taller than the London Eye, The Gherkin and The BT Tower, One Nine Elms will take its place in the London iconic skyline upon completion, which is expected to be in 2016/2017. With commanding views over London, Nine Elms and the new US Embassy site, the residential element of the scheme will include 436 private homes above an office and premium hotel.

On completion, the value of the development is expected to be in excess of £700 million (approx. €817 million). The scheme will be used by Wanda for a five-star hotel, marking the first move overseas by Wanda’s luxury hotel brand as well as the first luxury hotel opened by a Chinese firm outside China.

So, Wang Jianlin is going into Central London, not by buying over existing built properties in PCL, but rather purchasing plans that have already been approved, and developing them.  This is part of his international expansion.

Like Wang, HK's Li Ka Shing has also gone into UK in a big way, largely through Utilities.  See this blog post for more information.

On the other hand, Grosvenor Estates (owned by Duke of Westminster) are selling off their Central London properties and moving into Zone 2.

 Happy Investing!

Labour Government Wants Rent Control to Help Generation Rent

The next British General Election is due in 2015. It is not clear which Party (Tory, Labour, Lib Dem) would win.  With the GE around the corner, all the political parties are now jostling for position.

I'll give it back to the landlords

Ed Miliband (Labour Leader) will say that a Labour government (if he wins) will take action to deliver a fairer deal for the nine million people living in rented homes.  He would ban landlords from evicting tenants as a quick way of increasing rental income.   He will pledge to introduce three-year tenancy agreements with strict rules to make it more difficult to evict tenants. His policy is designed to be one of the most eye-catching elements in his campaign to tackle the "cost of living crisis".

Generation Rent
Pledging to champion Britain's overlooked "generation rent", Labout will introduce a mechanism to place a ceiling on rent increases and ban letting agents from demanding fees from tenants that can be as much as £500.

"Generation rent is a generation that has been ignored for too long. Nine million people are living in rented homes today, over a million families and over two million children. That is why a Labour government will take action to deliver a fairer deal for them, too."

Labour sources were adamant that their reforms do not amount to the blunt instrument of rent controls because the market will still set the rent. The Labour plans would give tenants security, with a three-year tenancy agreement to allow them to plan ahead, with predictable rent.  The Miliband plan will have three main elements:

1) New three-year tenancy agreements that would start with a six-month probationary period allowing landlords to evict a tenant if they are in breach of their contract. This would then be followed by a two-and-a half-year term in which tenants would be able, as they are now, to terminate contracts after the first six months with one month's notice.

Landlords, however, would only be able to terminate contracts with two months notice if a tenant fell into arrears or was guilty of anti-social behaviour; or if the landlord wanted to sell the property or needed it for their family. This is designed to prevent landlords from terminating tenancy agreements to put up rent.

2) A new formula to prevent excessive rental increases. Labour will be guided by the Royal Institute of Chartered Surveyors, which is examining options for a new benchmark. This could be linked to average rent rises, inflation or a combination of the two.

3) Ban letting agents from charging tenants fees just to sign a tenancy agreement. They will instead have to ask landlords for fees.

Political Hot Potato
There has been  a 13% rise in the average costs of rent since 2010.  One of the biggest causes of the cost of living crisis in UK is the price of renting or buying a home.

Observations 

It is very Labour to put in more regulations and rules which appear to help the less well-off.  In principle, this is not unreasonable.  After all, the scale of the problems facing "Generation Rent" UK voters look very large.

However, the issue is whether Labour has any ideas with regard to the fundamental issues facing the housing crisis in the UK.  UK needs some form of public housing scheme, or some fundamental and structural reforms to build new homes, so that these 9 million renters do not even need to rent in the first place.

Therefore, it would be very disappointing if all Labour intends to do is to introduce this form of 'rent control' to help "Generation Rent".  What about trying to solve the root causes?

Happy Investing!

Super Prime Property Sell-off by Grosvenor

Grosvenor Estates, the Mayfair landlord controlled by the Duke of Westminster, has sold off hundreds of millions of pounds worth of "super-prime" property in London because of fears about the capital's overheating market. (See article in the UK Independent newspaper)

The company posted a third successive year of record profits in 2013 as it took advantage of surging prices to sell off £240m of super-prime developments, typically defined as homes with an asking price of at least £5m. Profits from its UK and Ireland arm more than trebled as a result to £117.5m.

House in Belgravia 

Its chief executive, Mark Preston, insisted that the company was "not calling the top of the market".

But he added: "It's certainly true that part of the reason for making the sales we did last year was because we had a concern about the level of pricing and its sustainability, and the extent to which it was going to continue… Inevitably one has a concern over what happens next."

The move follows research from agents Knight Frank which showed overseas demand pushing up London's luxury-home prices 68 per cent since 2009, compared with a 49 per cent rise across greater London measured by Nationwide.

Grosvenor's sell-offs included 11-15 Grosvenor Crescent, which it sold in December last year for £114m to private developer Wainbridge. The company pumped sale proceeds into rental schemes in more-affordable areas of London such as Bermondsey. 

11-15 Grosvenor Crescrent

Bermondsey is a district in South London (Zone 2), in the Borough of Southwark. One of our investment properties is in Southwark, see our blog posts here.

Mr Preston added: "The picture for us looked increasingly risky. One of the things that should concern us all in London is the lack of supply of residential property that can meet the needs of people who want to live and work in central London and cannot afford or choose not to put most or all of their savings into a house."

The company traces its history back to 1677, when the present Duke's ancestor, Sir Thomas Grosvenor, married Mary Davies, who had inherited 500 acres of land north of the Thames to the west of the City of London.

The Grosvenors developed the northern part – now known as Mayfair – in the 1720s before moving south to Belgravia.

-----------------------------------------------

Observations

This article caught our attention.  It sounded like Grosvenor group were selling off their crown jewels in Prime Central London!  The prices in PCL must have gone so much out of whack that they thought enough was enough.

But look what they are doing with the proceeds.  They are reinvesting in London, but now in Zone 2.  They are also focussing on more affordable areas.  We were very happy to read this strategy precisely because this has been the strategy we have been adopting.

Who owns Grosvenor Estates?  The Duke of Westminster. This chap here.

Also a Major General!

His name is Gerald, and he is the 6th Duke of Grosvenor.  He is also one of Britain's richest man, worth about £8bn.  Notice his name, Grosvenor?  Yes, his family ancestors developed Grosvenor Square. 

That's why I said it sounded like Grosvenor group were selling off their crown jewels and family heritage. Some of these properties in Grosvenor Square must have belonged to the family for centuries.   I guess the 6th Duke of Westminster really means business.

Happy Investing!

Cost of Living in Singapore versus UK - Cafe Rosh Example

A lot has been said about the cost of living and rising prices in Singapore, in recent times.   There is no doubt that cost of living in Singapore has gone up quite a lot in the past decade.  Inflation numbers look rather scary.

Economist EIU Survey
The Economist EIU Survey named Singapore the most expensive city on Earth.  Our Government came out to try to rebut the damage caused by pointing out that the basket of goods used the Economist wasn't representative of local expenditure habits.  However, the damage was done.

More recently, an MAS & MTI survey found that Singapore's prices were found to be relatively high in most instances.  Cost of living is definitely one issue Singapore needs to tackle.

Back to Cafe Rosh
Anyway, the objective of this post is not to gripe about the cost of living in Singapore, but rather to share some photographs of a nice little cafe near Shadwell, where I had a bite.

Here is the cafe.  I was walking around the area near Shadwell DLR sometime last year when I spotted this.  It certainly isn't high-end, but it is not a run-down place either.  It turned out to be a most pleasant stop.

Going closer, I saw this advertisement.  Prices looked reasonable, so it was time to go in to check the place out. Tempting picture.

This is the menu. Alright, probably can't see it too clearly, so go to the next picture.

Check out the menu and the pricing.  My first reaction was - oh, that doesn't look too expensive.  The last time I had a Cafe Latte from Coffee Bean, it cost me more than SGD $6.

Here, the Cafe Latte was only £1.50 (regular) and £1.70 large.  That would be about SGD$3 (regular) and $3.40 (large).  Doesn't sound too bad at all!

At first I only thought I would stop for a coffee.  However, this sight proved to be too tempting.  I decided that I should a panini to try.

They also had cakes and stuff.  Carrot cake at £1.60 a slice.  Now, is that neat?

I ordered a large Cafe Latte and here was the serving.  All £1.70 of it.  It tasted really good.

That is the menu, Cafe Rosh, and the address.  Now, you can see my freshly made panini to the right of the menu.

I was blown away by the size of the serving, the hearty pieces of white chicken meat (I chose BBQ chicken) and it even came with a nice side salad.  The taste was great!  Cost? £3.00.  I don't recall I can get anything like this for SGD$6 back home.

Thoughts
As I enjoyed my Cafe Latte and the wholesome BBQ Chicken Panini, I couldn't stop but wonder why things in Singapore had gotten so expensive of late.

Perhaps it had something to do with the escalating land costs and rents?  This is something we ought to examine more.

Anyway, after a hearty snack, I was ready to explore the area some more.  Here are some more pictures.  This is Shadwell DLR, one stop to Tower Hill DLR.

There were many apartments in this area, and most looked quite new.  This was one.

Another apartment complex, but much shorter in height.

These apartments also looked fairly new. But notice, most of them are rather short.  That's London.  They really do not like high rise buildings.

Where is this Shadwell area I am talkng about? Here is the map.  The cafe was located along Watney Street.

Observations 
Prices in Singapore have gone really high in recent times.  Remember, London is a global city.  No doubt, UK is just emerging from recession (post 2008 crisis) and fixing her debt issues, yet, we cannot ignore the fact that if our costs keep rising, we will soon be priced out of the world market.

In this blog post, I show that Fine Dining is less expensive in London compared to Singapore!

Happy Investing!!

Rent too damn high, move to Singapore (New York Times)

From the New York Times by Shaila Dewan (April 29, 2014)

Anyone in the market for a luxury apartment in Hong Kong, London or Washington toward the end of last year was in luck. The rents on prime flats were sagging a bit. Billionaires could lock in leases on pieds-à-terre at a slight discount. You might suppose that those savings would trickle down to regular working Joes, but no — middle-market rents in those cities continued their apparently inexorable upward march.

The developed world’s wealthiest cities are facing housing crises so acute that not only low-income workers, but also the middle and creative classes, find them increasingly difficult places to afford. Redfin, the real estate website, recently found that there was not a single home on the market in San Francisco that would be affordable on a teacher’s salary. And that was just for buyers; in many cities, renting is even more expensive.

The rules of the market say that in this situation, people should simply opt to live someplace cheaper. But in today’s economy, that’s not so simple. Detroit has very cheap housing, but unfortunately, all of it is in Detroit. Alternately, more desirable cities could build more housing to satisfy demand, but new developments don’t tend to have that effect.

Luxury towers are sprouting up, adding density to unlikely places, from the Brooklyn waterfront to San Francisco’s Mid-Market district. But adding inventory to the high end does nothing to help the middle — one of the many irritating peculiarities of the 21st-century boomtown housing market. Building new apartments can actually push rents higher, and amenities for the masses, like transportation and parks, may have the effect of pricing them out. Everyone wants to live in these places, so no one can afford to. What’s a global city to do?

There is one city that has managed to surmount this problem. The achievement of near-universal affordable housing in a place with limited land mass might be a beacon of hope, were it not for the fact that it is Singapore, a sovereign city-state with one-party rule, wonky leaders, an economy that has grown rapidly in the last half-century and one of the highest per-capita incomes on earth. There, more than 80 percent of the population lives in public housing designed with walkability, ethnic diversity and green space in mind.

The Singapore solution required drastic action of a sort that most other places could not countenance: In the early 1960s, the government started building big, uniform apartment buildings, then pushed workers to move out of overcrowded shophouses and huts. Some herded their livestock along to their new flats. And at first, many residents were afraid of the higher floors.

Today, cities that want to actually solve their housing problems will have to stomach similar forms of psychic dislocation, not necessarily for those being housed, but for those with strong ideas about what their city should look and feel like. Many of the things that we cherish most about urban living are the very things that make housing more expensive. San Francisco, certainly one of the world’s loveliest cities, has restrictions that keep much of residential construction under 40 feet. And even in New York, no stranger to height, the high-rises to be built on the site of the old Domino Sugar refinery in Williamsburg have prompted teeth-gnashing from the guardians of the “urban fabric.”

New York’s new mayor, Bill de Blasio, who promised, on the campaign trail, to build more than 100,000 affordable apartments, seems to have an inkling of what will be required. “It’s going to take a willingness to use height and density to the maximum feasible extent,” he has said. “I don’t have a hang-up about it.”
But then, lots of people think they know what to do to fix housing: Stick it to the landlord with rent controls. Require developers to set aside low-cost units. Build more subsidized housing. Distribute more rent vouchers or, as San Francisco has recently done, funnel taxes and fees into a housing trust fund. For those with more faith in market forces, there is always the loosening of zoning regulations, in imitation of sprawling Houston — which is indisputably cheap, so long as you don’t factor in the cost of driving.

Yet many of these solutions are dwarfed by the sheer size of the problem. London alone needs, by one count, 800,000 new units by 2021 to meet both pent-up and new demand. Sydney, where the median rent on a two-bedroom apartment is now $2,600 a month, aspires to build more than half a million units by 2031, a goal for which it would have to double its normal pace of construction. New York needs more than 300,000 units by 2030. By contrast, inclusionary zoning, a celebrated policy solution that requires developers to set aside units for working and low-income families, has created a measly 2,800 affordable apartments in New York since 2005. It’s not clear we have the fortitude to deal with these shortages head-on.

But unshackling the private sector may not be a complete solution, either. Many housing advocates, even conservative ones, insist that the free market will never provide housing that low-income families can afford, because apartments are simply too expensive to build nowadays. Some form of subsidy is needed, they say.
But the size of a subsidy that actually covered the demand would be immense. The Bipartisan Policy Center in Washington figured out that giving all low-income families vouchers large enough to make their rents affordable would require federal rent supports, now at $62 billion a year, to more than double.

Of course, rents don’t always go up. Even San Francisco’s rents fell off a cliff after the dot-com bust last decade. But increasingly, there are economic forces at work that seem to move in only one direction: More people are moving to cities, and wealth is distributed more unequally. Apartments have become a global commodity, a safe investment for the well heeled, no matter where they actually live. Todd Sinai, a Wharton economist, says that just as cities have always had fashionable neighborhoods where only wealthy people can afford to live, now some “superstar cities” have become just like those places, the affluent districts of the globe. When housing is worth so much on the open market, it becomes harder to hold some of it back for regular workers. And eventually, Sinai says, the rich could find themselves displaced as well — by those who are even richer.
-------------------

Some food for thought:

1) From the supply side of the equation, looks like Singapore has ample supply of housing!  So, where are property prices headed?

2) Singapore leads the world in solving our housing problem.  I ever read that HDB has won United Nations Public Service Award for public housing achievements.

3) Article recognizes Singapore for being green.  In fact, we are the greenest city on Earth (in terms of green spaces), according to one survey commissioned by the Mayor of London. 

4) London needs so many units to even meet pent-up demand.  

5) High prices of many things in Singapore.  Is it because of land prices?  I don't know.  But here are some reflections as I sat in Cafe Rosh in London last year. 

6) Did you know that Fine Dining is less expensive in London than in Singapore?  Check out this blog post.

Do share your thoughts on this issue at my community forum thread here.

Happy investing!

London Islington Council Plans to Fine Buy-to-Leave Investors

Islington (EC1) seeks to 'end the scandal of new homes being wasted' by investors who buy properties and then leave them empty

Landlords who don't live in a new build home, and don't rent it to tenants, could be fined up to £60,000 under proposals which are aimed to clamp down on empty housing in London.   Islington Council said that new homes that are sold as investments and left to stand empty are rapidly becoming a problem in the borough, especially in EC1.

As many as half the homes in some recent EC1 developments have no-one on the Electoral roll, according to the the Council.  This phenomenon is also being seen in other parts of London, especially Zone 1.

The discussion paper can be downloaded for reference.

Highlights from the Discussion Paper

1. The Affordability Crisis in Islington and London (pg 6)
In the first half of 2013, the median property price was 12.36 times higher than the median income in Islington . This was the 9th highest ratio amongst London boroughs, worsening from 11.37 in the first half of 2012.  By comparison, the highest ratio in 2013 was in Kensington & Chelsea, where the median property price was 31.27 times greater than the median income.

The spike in price-to-earnings ratio is unsurprising when sales values are examined. In Islington, the median property price has increased from £119,000 in 1997 to £350,000 in 2008 and now £462,726 across 2013.

2. Overseas Purchasers
Using reliable Government data, Knight Frank conclude that “the majority of demand for new-build property in London from overseas remains focussed on the relatively small and concentrated market made up for the central London postcodes.” Islington’s part of EC1 is included in this market.

There is a concentration of vacancy in the South of the Borough, part of the London PCL.

The council is proposing to place the responsibility for demonstrating occupancy on the owners of individual dwellings to which the new planning obligation will apply. This could be via submission of evidence such as utility bills upon request from the council in cases where it is suspected that properties are left unoccupied.. Local planning authorities gather evidence of residential occupancy in a similar way when determining applications for a Certificate of Lawful Use.

Observations
This phenomenon is consistent with the claim that Prime Central London properties are a different asset class of its own.  Overseas investors are just parking their money there.  In another blog post, I had highlighted research showing that PCL prices were going up, while rents were coming down.

Where affordability is concerned, I wonder what the equivalent statistics for Singapore are.  Perhaps I will do some fact finding when I have more time.

Happy Investing!

References
http://www.islington.gov.uk/islington/news-events/news-releases/2014/march/Pages/PR5243.aspx

http://atkinsonmcleod.briefyourmarket.com/Newsletters/Atkinson-McLeod---April-2014-Newsletter/London-council-plans-to-fine-buy-to-leave-investors.aspx

http://www.theguardian.com/society/2014/jan/31/inside-london-billionaires-row-derelict-mansions-hampstead

"We accuse Park the bitch" says North Korea

This has nothing to do with London property, but worth a laugh. Reading this tickled me so much. On a more serious note, this chap commands 25 million people and may even have nuclear weapons.  This was taken from the Guardian newspaper. 

North Korea (aka Kim Jong Un) has launched a vitriolic attack on the South Korean president, comparing her to "crafty prostitute" in thrall to her "pimp" Barack Obama.

"Park the bitch!"

"Comfort Woman"
It also described Park Geun-hye as America's "comfort woman". The comments were issued on Sunday by the Committee for the Peaceful Reunification of Korea (CPRK), which handles cross-border affairs, following the US president's two-day visit to Seoul. Kim's recent remarks have been unusually personal.

Earlier this month state media ran misogynist articles, including one headlined "We accuse Park the bitch", labelling her as a lunatic, idiot and "cold-blooded animal" and emphasising the fact that she has never married or had children.

"Disgusting Old Lecher"
It comes days after an article which described the head of a United Nations commission on human rights in North Korea as a "disgusting old lecher". Pyongyang was angered by the team's report, which said it was committing grave and systematic human rights abuses on a scale unparalleled in the modern world.

"What Park did before Obama this time reminds one of an indiscreet girl who earnestly begs a gangster to beat someone or a capricious whore who asks her fancy man [pimp] to do harm to other person while providing sex to him," North Korea's CPRK said.

Park and Obama

Those remarks "laid bare her despicable true colours as a wicked sycophant and traitor, a dirty comfort woman for the US and despicable prostitute selling off the nation," said the CPRK.  Park's father was the late South Korean dictator Park Chung-hee.

Experts believe, "it's not so much about her personally, but rather a symbol of a new rhetoric … I think this is an attempt to use the same kind of emotional abuse as [Kim Jong-un's] grandfather," said Tatiana Gabroussenko, an expert on the regime's ideology and propaganda at Korea University in Seoul.

"Loud, Personalized Tone of Abuse"
She said that while North Korea always attacked its southern neighbour's politicians, the "loud, personalised" tone of recent abuse seemed to echo the approach of the 1950s and early 60s. It might be part of emphasising his likeness to his grandfather, with a return to "proletarian candour", she said.

"That was something used in Kim Il-sung's time and applauded; it meant he was 'one of us', not an elite intellectual, speaking from his heart," she added.

Using the "comfort women" comparison in particular touched on an extremely sensitive issue, not only insulting Park but also the survivors of the second world war brothels, he noted.

Why are all the women in PJs?

On a more serious note, the world is a crazy place. Best not to expect too much from the world.

On an equally serious note, we shouldn't underestimate the importance of NS.  Yeah, I know, nobody likes to serve.  But if some joker government not too far away from us suddenly says things like this Kim Jung Un in our face, then how?

Happy investing!

Hoola - 750M from future Custom House Cross Rail, 250M from Emirates Cable Car

26-34 Tidal Basin Road, Silvertown in the London Borough of Newham - Hoola!

Don't the buildings look really interesting?  They certainly caught my attention!  Hoola, Hoola! (reminds me of a song)

A closer look at the design - still rendered using a computer.  However, it gives you a very good idea what the exterior of this Hoola building would look like.  Really cool, I think.

Hoola Site
The site comprises 0.47 hectares and is a redundant island site containing a range of low rise buildings and a derelict pub adjacent to Silvertown Way flyover (A1020).  Immediately north of the site is the National Grid power line, which runs east to west from Barking to Canning Town.  North of this is the DLR line, beyond which are residential and commercial properties.  East of the site is a pumping station and beyond this, there are new residential developments along Western Gateway ranging in height up to 19 storeys.

South of the site is the 'Landmark' site (previously owned by the LDA), which currently comprises open land a water sports centre for the adjacent Royal Victoria Doct.  West of the site is the Silvertown Way flyover.

The site is located on Tidal Basin Road, which forms an access road to the Excel Exhibition Centre and Royal Victoria DLR station.  Royal Victoria DLR station is 200 metres away whilst Canning Town London Underground station is 900 metres away.  The Emirates Air Line Royal Docks Terminal is also located 250m away.

The site looks like this (Google Maps).   That dis-used tavern has already been torn down.  Hoola will be built on that plot.

Turning around, this is what you see.  The structure on the right is the Emirates Cable Car.

The proposed Custom House Crossrail station is 750 metres away.  If any property agent tells you otherwise (e.g. Crossrail is 1 minute away), let it be known that I have read some of the Planning Permission documents and all the information you see here is from source documents.

This map gives you a good idea of where the site is.  See the yellow oval, marked with a yellow H, just to the west of Royal Victoria DLR.

Comprehensive Re-development
The proposals are for the comprehensive redevelopment of the site to provide a residential mixed use scheme comprising two towers of 23 and 25-storeys, what will include commercial floorspace at the ground floor level within the eastern tower building.  The development proposes 360 residential units (16 studios, 196 one-bedroom units, 116 two-bedroom units, 32 three-bedroom units).

There is no affordable housing on this site as the developer will fulfil its affordable housing obligations off-site. Clever!

Comparison to Royal Wharf and Royal Dockside - This is Much Better Located!
I had blogged about Royal Wharf here and Royal Dockside here.  Both of these developments are at best marginal, to me.

Now, this Hoola development has all the advantages of Royal Wharf and Royal Dockside (in terms of benefitting from the upcoming Asian Business Park) and most crucially it is much nearer to the new Crossrail.

I have walked that area before (in fact I probably walked right past this site) and it is very pleasant.  See this blog post.  A picture of the Emirates Cable Car below. (Emirates Royal Docks)

Pricing and Launch Date 
No information on this yet.  The Planning Permission was granted not too long ago. I heard that they will launch this in May.  As for pricing, I expect them to price even more aggressively than Royal Wharf, given its better location.  Stay tuned!

Consider Greenwich Peninsula (upcoming)
If you are interested in this area of London, do consider the many upcoming developments at Greenwich peninsula, near North Greenwich Tube Station.  Check out this blog post for more information.

Move on to Part 2, for more screenshots and pricing.

Do share your views on our community forum on Hoola!

Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk

Should You Sell Now? (Singapore Property)

This was a question posed by Brother Juniper on the www.condosingapore.com discussion forum.

"Need some advise from property investors here.

"Currently me and my wife have 3 properties in Singapore and 2 properties are currently rent out to expat tenant on corporate lease which will run till 2016. rental yield based on purchased price from 5 and 2 years ago is around 6% and 4.8% respectively and our outstanding mortgage for both properties is around 50% based on current valuation price. For our 3rd properties, that's for own stay and we do not intend to sell.

"So the question on our mind now is

a) Should we sell our investment properties, cash out and reinvest in future?

b) Should we keep both property to enjoy regular rental income stream?

"Concern for (a) is the cost of replacement will be very high due to cooling measures and we might not be able to find a replacement properties which we like as much as the one we have right now. So we might end up having millions "rotting" in the bank away

"Concern for (b) is that we will not get to enjoy the feeling of being cash rich in our life time or we might missed to catch the property cycle.

"So the question now is, should we sell or do nothing, or is there other options?

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The discussion has been very interesting.  Some say sell, some say keep.  There is no consensus. A lot of fodder for discussion.  So, what are the considerations?  I don't pretend to know the answer.  So, I am just listing out my thoughts.

Singapore Property Market
Where is it headed?  Based on URA's latest press release, it looks to be trending slightly downwards.  See this chart taken from the URA press release.  However, how much would it drop by? 5%? 10%? 20%? Now, if we knew the answer to this question, then we would all be rich tycoons, no need to talk already.

ABSD and Property Cooling Measures
Some are very confident that the property prices won't drop by too much, because once it drops by say 5% or 10% max, Government will lift some, if not all, of the cooling measures.  Perhaps, I don't know.  What has the Government said about property prices?

In Singapore Budget 2014, DPM Tharman said that it was too early to relax property cooling measures.  He said that Government will continue to monitor and adjust where necessary.  DPM Tharman also said, "we are not engineering a hard landing."

This is reassuring, however, what is DPM's definition of a hard landing?  My own guess is a sharp drop of 50% is really hard.  40% sounds hard.  The lower the percentage (30%, 20%, 10%) gets less and less hard. The question is really whether Government has a point whereby they are ready to relax the ABSD?  We don't know.

Singapore Property Prognosis 
Based on the Savills Global City report, which I blogged about here, the Savills researchers think very positively of Singapore.  They even go as far as to say that the long-term prospects of Singapore are a good bet.

You have to understand that property in Singapore will only be of high value if economic growth continues, and we continue to be a top global city.  Prices in our city state have gone up so much, it makes real estate in other top global cities look reasonable (or even cheap) by comparison.

I have quoted Mr Lee Kuan Yew who wrote in his latest book that  he wasn't sure if Singapore would be around in a hundred years.   But that is long-term.  I suppose all of us are only looking at the next 20 to 30 years.

Brother Juniper's Questions 
Let's go back to Brother Juniper's questions.

He is asking whether he should sell his two investment properties, bought 5 years and 2 years ago.  They are earning 6% and 4.8% rental yield based on purchase price.  I assume that this information is all that we have.

Rental Index
To answer this question, on top of looking at prices, we also need to look at where rentals are headed.  So where are they headed?  The same URA press release carried this Annex A3.  Like pricing, it suggests that the rental prices are trending slightly downwards.

Will it continue to go down?  That depends on demand and supply.  With the slowing down in population growth (Government cut back on employment passes) as well as more and more supply coming online, simple supply and demand analysis suggests that this trend may continue.

So, Brother Juniper should not assume that this rental yield will stay constant.  Based on data, it looks like it is trending down.

Sell and Buy Again Later?
This is a very hard question to answer.  It sounds like Brother Juniper is very happy with this purchases. Some forum replies have pointed out that it may be very difficult to find good properties to buy into again in the future, even if the market has come down.

This is a good point. If there is any emotional attachment to the 2 investment units purchased, then perhaps it is best not to sell.  Emotions and feelings are hard to quantify.  If you are happy with your lot and can tide through the storms, then leave it alone and let it run.

Cost of Replacement is High Due to Cooling Measures (Bro Juniper's point)
This comment assumes that the cooling measures would not be lifted.  This is something we should not assume. It would be reasonable to expect Government to lift some, if not all, of the cooling measures if and when the property market grows soft. In fact, some developers have started to lobby the Government on this point.

If indeed the property market drops significantly (say 30% to 40%), then we can expect replacement units to be much less costly not just in terms of absolute price but also because the property cooling measures would have been lifted.   But will the property market drop by so much?  I don't know.

Bro Juniper's Investment Horizon and impact of TDSR
Another issue is Bro Juniper's investment horizon (i.e. his age). How old are they?  This has a lot of impact on the analysis.

First, on TDSR front.  As I had argued in this blog post, I think TDSR is an excellent mechanism to ensure market stability and TDSR is here to stay, regardless of market condition. What I mean is that even if the property market crashes and Government lifts all the cooling measures, TDSR is still here to stay.

I think Bro Juniper would have purchased his existing investment properties before TDSR was put in place. Then Bro Juniper needs to analyse (check with the banker) on how much they can loan under the TDSR framework.  It may be worthwhile to go through this exercise.  In the past, credit was much easier to come by.  With TDSR, this is not always the case.  I have heard of so many stories that people just give up.

Second, again related to age, the younger you are the more opportunities you have to sell when prices are high and wait to buy in a downturn.  Also, TDSR is age-sensitive.  The older you are, the less you can borrow.

Happy Investing!

Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk

Singapore Property Prices Coming Down?

According to this article "Private home prices fall in all districts" (Straits Times 26 April 2014), prices have come down 1.3% in 2014 Q1.  Private home prices fell across the island, the first time in nearly 5 years, with the biggest drop in the city fringe (areas like Bishan & Queenstown).

Glut of Unsold Units
Out of total supply of 80,261 private homes under construction at the end of March, slightly more than 1/3 or 29,482, were still unsold.   This 80,261 number excludes the Executive Condos. After adding the supply of 13,691 EC units in the pipeline, the total number is 93,952 units in the pipeline.  Further, another 11,042 units would soon be added to the pipeline.  This brings the total to 105,000 EC plus private units in the pipeline.  All these exclude HDB.

Also note that Minister Khaw Boon Wan has blogged about ECs.  He said that the take-up rate for ECs has been high and supply has been ramped up to meet demand.  He will continue to ensure that EC scheme stay on track.

The above statistics are from the URA Release of 1st Quarter 2014 real estate statistics - the press release can be found here. (dated 25 April 2014, worth a read)

City fringe was hard hit because developers were offering sweeteners and discounts to move units.

A closer look at the chart - which way is it headed?

Some More Charts from URA Press Release

Residential Price Index by Type - since 1997 Q1 (4Q 98 = 100)

Property Price Index by Type of Property since 1997 Q1 - (4Q 98 = 100)

House Hunting
As shared in my About Us page, we currently live in HDB and we do not own any other property in Singapore.  Looking at our investment portfolio, we are aware that we are under-invested in Singapore. But, is this the correct time to buy?

We have visited a couple of units in recent weeks.  Just today, we visited a few condominiums.

For instance, we saw a couple of units at Southhaven II, a freehold condo, at Hindehe Walk, very near Bukit Timah hill.   The place was pleasant and well kept, however, asking prices were $1.7Mil for a 1,800 sq feet unit unit and $1.6Mil for a 1,600 unit.

Well, we are not prepared to pay these prices.  Maintenance charges were $360/month and we were told that those units could rent out for about $4,000.  The estate agent told us that 40% to 50% of the units were rented out.

Well, we don't feel very inspired to move after viewing the units at these prices.  Oh well, that's just us.

Fundamental Demand and Supply Issues 
We see new units sprouting up everywhere.  Government has greatly stepped up HDB supply.  Just within a 500M radius of our HDB flat alone, we have at least 5 X 35-40 storey blocks being built at a breakneck speed, plus another 4 X 35 storey 99-year leasehold development being built.

Tall HDB Towers

Should You Sell Now? 
In my next blog post, I discuss this issue.  So many homes coming up!

There has also been a sharp drop in new home loans.  Check out this recent blog post. 

I found an article by CNBC from Sep 2013 where the analyst (Barclays Bank) predicted that Singapore home prices could be headed for a 20% correction by 2015.  Time will tell.

Channelnewsasia article (27 Apr) on property developers pulling out stops to boost sales.

Research Report by Property Firm HSR - 50 Projects with less than 50% sold.

Happy Investing!!

Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk

Stratford Central by Telford Homes, E15, Part 2

As expected, the project is selling very well, with lots of interest from overseas investors.  This was my first blog post on Stratford Central a couple of days ago. I read in another report that Telford Homes is already building at full capacity.

Anyway, we have purchased from Telford Homes before. Their after-sales customer service is very good. So, even if you find any defects with your unit, they will rectify it promptly.  (Yes, there were some defects in our units.)

I have received some questions from several readers and let me go through them here.

1.Location of Stratford
Question: Stratford is in Zone 3.  Why is the location good?

Answer:  This is a very good question.  All investors should stare carefully at the London map and read about the area called Stratford before committing to any such purchase.  Stratford is 10km north east of Charing Cross (Zone 1).   It is 13 minutes by DLR to Canary Wharf DLR station.

Here are the rail links from Stratford (taken from wiki):

2.Location of the Tower
Question: How far is the tower from the Tube station?  Is it really one minute?

Answer: From all that I can see, the tower is at most 3 minute walk from the station.  You can check this out from the Google Maps.  You can also see this from the computer generated image of Stratford Central below. (taken from Telford Home's website)

3.Views From The Tower
Question: Are there good views?  Will there be new towers to block the view?

Answer: The immediate area looks very low build, see the picture below.  While nobody can predict whether more tall buildings will be allowed in the area, we can be reasonably certain that this place will never become like what we see in Singapore, a super congested HDB estate.  Also, the area close to the Underground station is the Olympic Area as well as the Westfield Stratford Shopping Centre. I think all the facilities will be preserved (i.e. not high rise towers)

See the computer rendered picture below.  The top 4 floors are penthouses, yet unreleased.  I think they will have gorgeous views.  I'm sure the pricing for the penthouse units would be very aggressive.

4.Noise from Tracks  
Question: Will there be noise from the tracks?

Answer: The answer has to be yes.  The issue is how much.  I think the lower floors that directly face the track may get a bit noisy.  Perhaps you want to consider buying a higher floor, or a unit facing away from the tracks.

5.Taxes
Question: What is the UK tax on rental?  What other tax expenses?

Answer: 
Income Tax (Self Assessment) is 20% after allowable expenses.  Singaporeans are not eligible for the personal allowances.

Council taxes are borne by the tenant, if tenanted out.  Otherwise borne by landlord.

Service Charges (aka maintenance charges) - Borne by landlord.  Check with developer.  These can be quite high.

Ground Rent - Borne by Landlord. Again, check with the developer.  Usually about 300 to 500 pounds a year.

6.Lease of the Property
Question:  The lease is only 200 years.  Is that ok?

Answer: Perfectly fine. Our properties in London are 125 years to 250 years.  We plan to sell everything in the next 20 years, so even the 125 years lease place is ok.

7. Are You Buying Into Stratford Central? 
No, we are not.  We have invested a substantial sum in London prior to 2014.  As I have shared in other threads, the prices have gone up substantially.  So, we are staying out of this one.


Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk